Gulf Conflict Sends Shockwaves Through Olive Oil Supply Chain
While olive oil is not directly tied to the Gulf conflict, the sector’s dependence on fuel, fertilizers and shipping leaves it highly vulnerable to prolonged disruptions.
The global olive oil market may not be directly affected by the current war in the Gulf, but the broader consequences of the conflict are escalating rapidly following the closure of the Strait of Hormuz due to the U.S.-Iran war.
The spike in global food and fuel costs could leave millions of families priced out of staple foods.
Energy and fertilizer prices are soaring while supply chains worldwide are tightening, raising concerns about the impact on agricultural production and food costs.
Major Mediterranean producers, notably Spain and Portugal, rely heavily on energy and fertilizers. Modern olive farming, especially in intensive and super-intensive systems, increasingly depends on irrigation, mechanization and synthetic fertilizers.
At the processing stage, olive oil production also requires substantial energy for crushing, malaxation and centrifugation. Packaging materials such as glass and transportation costs further tie the sector to global energy markets.
Sector outlooks and policy analyses consistently indicate that olive oil production remains highly exposed to international volatility, meaning external shocks can quickly offset the benefits of strong harvests.
Research shows that even the economic viability of by-product valorization in olive oil production is strongly influenced by energy prices.
This creates dual exposure for producers: upstream through fertilizers and agricultural inputs, and downstream through industrial energy use and transportation. In a sector characterized by fragmentation and relatively thin margins, these pressures may prove difficult to absorb.
The European Commission has authorized member states to cover up to 70 percent of the additional costs of energy and fertilizer for agriculture and fisheries.
However, the measure does not include direct European Union funding. Each government must finance support through its own budget, potentially creating disparities between wealthier countries and heavily indebted states with more limited fiscal capacity.
Additional effects are expected in import and export markets as logistics operations face mounting fuel costs.
Aside from very small quantities of high-quality olive oil crossing the Atlantic by wind, most of the 490,000 metric tons consumed annually in the United States are transported by fuel-powered vessels. Shipping expenses already represent a major component of retail prices.
The current situation could push shelf prices higher while also influencing domestic olive oil production dynamics in the United States.
Broader economic impacts are also expected across agriculture and industry. According to newly released estimates from the World Bank, even if the Strait of Hormuz reopens and traffic returns to pre-war levels by October, overall commodity prices would still rise by at least 16 percent compared to 2025.
The World Bank projects fertilizer prices to increase by 31 percent in 2026, marking the steepest rise since the start of the Russian invasion of Ukraine in 2022.
The institution also warned that ongoing uncertainty surrounding the conflict could continue disrupting procurement, investment and long-term planning across sectors critical to agricultural production.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” World Bank Group Chief Economist Indermit Gill said in a statement.
“The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest, as will developing economies already struggling under heavy debt burdens,” he added. “All of this is a reminder of a stark truth: war is development in reverse.”
At the same time, supply disruptions continue to push oil and gas prices higher, even as profits for major energy companies rise, and output declines.
Some companies are channeling windfall profits into dividends and share buybacks, signaling expectations that elevated prices and geopolitical tensions may persist over the longer term.
The implications for global food security could be severe. According to Carl Skau, deputy executive director of the World Food Program, roughly one-quarter of the world’s fertilizer supply passes through the Strait of Hormuz.
“The spike in global food and fuel costs could leave millions of families priced out of staple foods,” Skau warned.
He added that if the Middle East conflict continues through June, an additional 45 million people could be pushed into acute hunger by rising prices, potentially driving global hunger to record levels.